Civil Procedure Seminar Six: Other Interlocutory Applications

Interlocutory Applications - General Principles 1. Three main purposes: - Disposing of actions w/o trial: default judgment (O 12/19), summary judgment(O14), admission (O13A) - Protecting rights and interests pending trial : Mareva injunction, Anton Piller, security for costs, order for interim payments, prohibition orders - Proper identification of issues and preparation for trial: discovery and interrogatories 2. Considerations for applications: - Intended application is justified in law? o the relief sought; the jurisdiction of the court to grant; and criteria to be satisfied under common law or statute Practically/tactically desirable to make the application? o Cost-effectiveness: benefit to be derived vs the costs involved; time(delay?); and tactical considerations e.g. demoralize the opponent or expose the weakness of his case so as to facilitate settlement; or may give him a chance to improve his case e.g. application for F&B lists may alert him of deficiencies of his evidence or pleadings Judges have criticized both the parties and the lawyers for misusing interlocutory proceedings which result in prolong and greater costs; or used by a more resourceful party to compel settlement. Under CJR, the courts have greater power to actively manage cases so as to prevent misuses of these proceedings.

3. Masters have the discretion to deal with interlocutory applications on paper (i.e. without an oral heading) or to order an oral hearing: O 32 r 11A (1). Therefore, although the consent of the parties is not required, their representations may still be considered by the master. And where a master directs an application to be disposed on papers and a party considers this inappropriate, that party may apply for an oral hearing. 4. Practice Direction 5.4 sets a non-exhaustive list of interlocutory applications which may properly be disposed without an oral hearing, but they have not been frequently invoked. These applications include: determination of time and rate of payment under O 13A (admissions); F & B particulars, security for Costs, summary judgment, interim payment, setting aside a default judgment, amendment (where no argument on limitation), and case management summons.

5. A Master of the Court has jurisdiction to grant relief for interlocutory applications made by inter partes summons (normally supported by affidavit evidence), except for certain interlocutory injunctions that can be made ex parte without notice to the other side e.g. Mareva Injunction, Anton Piller Orders, and Prohibition Orders; or where the case is listed before certain special lists e.g. only a judge in charge of the list may hear such applications on a Commercial List. Most hearings before the masters take place in chambers. 6. Interrogatories may be issued without leave in the CFI for twice(unless against government), but a leave is required in the DC. 7. Applications by Inter Partes Summons Parties may generally make interlocutory applications by inter parties summons supported by an affidavit: O32 r 1, unless they are prescribed to be made by a case management summons under O 25 r7 RHC and r10 RDC.1 An inter partes summons is issued when sealed by the Court: O32 r 2. It should be indorsed with a reference to the Rules under which the application is made; or the Registry may reject it. It may not be amended after issue without leave of the court: O 32 r 2(2). All inter partes summons must be served on every other party at least 2 clear days before the specified hearing day, unless otherwise provided by the Rules2: O 32 r 3. The court may adjourn the hearing of the summons as may be appropriate: O 32 r4(1). The other party may restore the adjourned hearing to the list on 2 clear days notice to all the other parties served with the summons. A party who has taken out a summons in a cause or matter may not withdraw it without leave: O 21 r 6. If a party fails to attend on the first or any resumed hearing, the court may proceed in his absence, having regard to the nature of the application, as it thinks expedient to do so: O 32 r5 (1). In doing so, it may require to be satisfied that the absent party had been duly served with summons or the notice of appointment: O 32 r5 (2). Where an order is granted in such a hearing has not been perfected, the court may rehear the summons as it thinks just to do so: O 32 r5(3). But the if the order has been perfected, the court may not rehear except with the consent of all the parties, or in specific cases expressly provided under the Rules, e.g. setting aside
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O14 Summary Judgment; O 86 Summary judgment for specific performances; O 18 r 21 trial without pleadings; actions in which directions have been given under O 29 r 7 (i.e. interlocutory injunctions, Anton piller orders); actions for infringement of a patent, and actions for PI for which automatic direction are provided by O 25 r 8 2 Time summons may be served before the date of hearing; 10 clear days for summons for summary judgment: O 14 r 2(3); 4 clear days for summary judgment for specific performance: O 86 r2(3); 14 days for a case management summons: O 25 r1(1) RHC

summary judgment: O14 r 11, O86 r 7; revoked or varied discovery orders: O24 r17; orders for discovery and interrogatories: O26 r 8; order determining place and mode of trial: O33 r4(1). If the party issuing the summons fails to attend the hearing and the summons is dismissed, the court may allow the summons to be restored to the list, if satisfied just to do so: O32 r4(5). Where an application properly made by summons has been dismissed, the court will decline to hear the same application again on a fresh summons, unless there is a material change of circumstances; and the applicant can only appeal against that decision. However, in DC, any direction or order made under the Rules (including order made on appeal), may be revoked or varied by a court direction or order before the trial with which the original direction or order was made: O32 r 8. (wide power) 8. Ex Parte Applications Applications for leave to issue and to serve a writ out of jurisdiction, interlocutory injunctions and Anton Piller orders may be made ex parte, normally by an affidavit verifying the facts and matters relied on. These reliefs are mainly justified by extreme urgency and/or secrecy. Generally an order granted ex parte will only be for a short period of time until the next inter partes hearing, and the court will require the applicant to forthwith take out an inter partes summons to determine whether or not the granted relief should be continued. An applicant to an ex parte application must make full and frank disclosure of all the material facts, this duty is positive and continuing i.e. extends to subsequent changes. Where the application is granted based on material misstatements of fact or where the applicant failed to make sufficient disclosure, the court may set aside it. An application to discharge such an order may be made at the interlocutory proceedings without waiting for a trial. Such application should made to the same judge or master for review of his decision or to a different judge or master.

Full and Frank Disclosure Standard Chartered Securities Ltd v Lai Arthur & Others [1993] HKC 375, Woo J Facts: (see ppt for detailed allegations) - Defendants applied for discharge of Mareva injunction on material non-disclosure. Plaintiff alleged certain facts pointing towards Ds breach of fiduciary duty, but failed to disclose other facts that are relevant to the merits of Ps case, and whether there was a real risk of dissipation. (cf. requirement for Mareva injuncftion) Held: the court granted a fresh injunction in view of strong evidence that supports certain allegations of the plaintiff, and the questionable integrity of one of the defendants. General principles: 3

(1) Material facts are those relevant to the courts exercise of discretion. Test: whether the court should have these matters in the weighing scales, but not the materiality. (2) Materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers. (3) Positive duty on the applicant and his lawyers to point out to the court any point which are to the applicants disadvantage. For Mareva Injunctions and Anton Piller Relief, the plaintiff must identify the crucial points for and against the application clearly and distinctly. It is insufficient that relevant information giving rise to a defence is in the body of the plaintiffs affidavit.

(4) The applicant must disclose material facts known to him, and additional facts which he would have known had he made reasonable enquiries. Thus, for Mareva Injunctions and Anton Piller Relief, the plaintiff should carefully consider the nature of cause of action and the factual basis for making his application; he should make a thorough check to ensure all defences actually raised by the defendant are identified and fairly summarized in the affidavit.

(5) Where material non-disclosure is established, the order granted should generally be discharged. Innocence (e.g. due to complexity of the case or time constraints) does not in justify non-disclosure, though it may justify the courts exercise of discretion, see (6). The discharge serves to deprive the wrongdoer of an advantage improperly obtained; and to ensure the applicants of ex parte order fulfill their duty of disclosure, failure of which may lead to a liability in costs. (6) The court however may exercise its discretion, notwithstanding the proof of material nondisclosure, to continue, or to make a new order on terms, depending on where justice of the case lies (e.g. the degree and extent of the culpability with regard to the non-disclosure, and its significance to the outcome of the application.) Relevant considerations: o Innocent or deliberate non-disclosure; o Excuse or reason for such non-disclosure; o Whether non-disclosure would in fact resulted in order not having been made at the first place or would have made no difference

Order for an extension of time O3 r5

1. The Court may, on such terms as it things fit, by order extend or shorten the period within which a person is required or authorized by the Rules/ judgment/order/direction to do any act in any proceedings: O3 r5(1). And it may do so even if the application for an extension is made after the expiration of that period: r5(2), unless the Rules otherwise provided that extension should be made within the period.

2. Rules limiting extension of time post-CJR: Milestone dates may only be extended in exceptional circumstances; the court may impose self-executing sanctions, and unless orders under its active case management powers. 3. Judges are also less inclined to grant extension of time because they have to deal with a case as expeditiously as reasonably practicable: O1A underlying objectives. 4. An applicant for extension of time should provide a clear statement of the reasons for his inability to comply with the limit. In HK, an extension may not be granted without a written record, usually an affidavit showing good reason: Phillips v Taunton and Somerset National Health Trust (1996)(CA). 5. The court must consider all the circumstances and decide whether the overall justice of the case requires the exercise of the discretion to extend time. The courts will normally take into account (a) the length of delay; (b) the reasons for delay; (c) merits of the case; and (d) degree of prejudices to the other party. 6. This often involves balancing of two principles. The first is that the rules of the courts must be observed. The second is that the applicant should not be denied a fair trial only by procedural default unless the damage to the other party cannot be adequately compensated. Neither of them is absolute and the court will avoid taking a mechanistic approach: Costello v Somerset CC [1993] per Sir Thomas Bingham MR. After CJR, the court is more likely to give more weight to the first principle.

Fortune Asset Development Ltd v De Monsa Investments Ltd [2009] (first case post-CJR illustrating relevant factors in balancing exercise)[Registrar] Facts: P claimed D Co (the applicant) for failing to complete a S & P for properties worth of more than $2m. O 14 summons was issued, and the applicant contended incapacity of its director, and made an application for extension of time for filing further evidence (an affirmation after the original period expired O1B, r1(2)(a). Held: extension granted, because it would be unjust to deny a fair trial for D. - The court had regard to the original time allowed, that the original time was laid down by consent, the reason for not adhering to the original time, when the application was made, whether the applicant had used his best endeavor to secure attendance of W, whether it has control over Ws availability, whether it has fulfilled its duty to impress upon W the need to turn up on a designated date to affirm or to provide certain evidence (e.g. medical report), the further time realistically required for filing the additional evidence, whether there is any de facto extension of time, and whether extension of time may impact any milestone date. After CJR, the court has to comply with the underlying objectives in O1A to deal with a case as expeditious as reasonably practicable and to secure just resolution of disputes with substantive rights of the parties. Although Ds excuses where quite unacceptable, the amount involved was substantial ($21m 5

deposit to be forfeited and $45m damages claimed). D had made aware an expert W of the need to prepare for medical report. And no milestone dates had been set. The judge however warned exercise of discretion should not be regarded as a precedent to grant extension in future similar situations.

Ip Sau Lin v Hospital Authority [2009] - conditions that may attach to an order for extension Principles: - Where the parties do not inform the court of any delay due to anticipated or actual noncompliance and/or fails to seek remedial directions on good and sufficient grounds in a timely manner, the court may impose sanctions under its case management powers . These sanctions include short-scheduled self-executing orders and inter partes costs sanctions, an order that the defaulting party pay a sum into court: O1B r1(3) and 4, O2 r3 RDC; a wasted costs order where it is clear that the legal representatives have caused the wasted costs to be incurred and it is just to do so: O62 r8 RDC. Where there has been unwarranted or significant delay in bringing the matter to trial, the court master may direct the issue of whether interest should be awarded over the relevant period be reserved to the trial judge or failing a trial such issue be brought before a judge for determination. The trial judge may deny discretionary interest over that period.

Interlocutory Injunctions 1. A court order requiring a party to either refrain from doing a particular act(prohibitory) or to do a certain act(mandatory). 2. Temporary measure pending grant of permanent injunction; to avoid final judgment being ineffective (Mareva injunction) i.e. to protect or preserve rights and interests pending trial when just and convenient to do so 3. Free-standing interlocutory injunctions: O 29 r8 Generally ancillary to a substantive cause of action, but CFI may grant a free-standing interlocutory injunction in support of foreign proceedings which have been or about to be commenced outside HK; AND are capable of giving rise to a judgment enforceable in HK: O29 r 8. This section applies even if the subject matter of those proceedings would not, apart from this section, give rise to a cause of action over which the CFI has jurisdiction; or the interim relief sought is not ancillary to or incidental to any proceedings in HK: s 21M(1), (3), but only when the court thinks it is just and convenient to do so. The CFI may grant this relief conditionally or unconditionally as it thinks just: s21M(2).

A free-standing Mareva Injunction may only be granted in accordance with the normal rules and it is just and convenient to do so. Note that O29 r 8 injunctions may only be granted in support of foreign proceedings without a substantive cause of action in HK, but not to grant interlocutory injunctions within HK without a substantive cause of action in HK. The applicant seeking an O29 order must make an originating summons made in Form No 10 in App. A to the Rules: O29 r 8A(1) RHC. Upon hearing the originating summons, the court may direct all or any part of the haring be conducted in open court: O 29 r8A(3)RHC. The court may grant leave to serve a claim for free-standing interim relief out of the jurisdiction: O11 r1(oc) RHC.

4. Jurisdictions to grant interlocutory injunctions - CFI: unlimited jurisdiction to grant interlocutory or final injunctions where just and convenient to do so: s21L(1); - DC: may grant interlocutory or final injunctions: s52B DCO; but only for immovable property where the annual rent, rateable value or annual value not more than $240,000; or movable property or matters of contract not exceeding $600,000: s52(1)(a)-(d) DCO. 5. Interlocutory injunctions are equitable and discretionary reliefs that they may be refused even if P can establish an infringement of its right, leaving P only with damages in the following situations: Where P can be adequately compensated with damages, in particular where the wrongs hav ceased and is unlikely to recur: Proctor v Bayley [1889]; Infringement of Ps rights is trivial: Behrens v Richards [1905] (grant of a declaration of Ps rights and nominal damages were sufficient as there was no injury done to P); Sharp v Harrison [1922] (D breached a negative legal convenant after warning. Though P would generally be entitled to injunction, D proved no damage was done to P and offered undertakings that would prevent future damage. Mandatory injunction refused as it would inflict damage out of all proportion to the relief given to P) Unacceptable behavior, fraud or dishonest conduct of P: Hubbard v Vosper (P protected its secrets with deplorable means and did not come with clean hands. Ps interlocutory injunction restraining publication by a former disciple of its confidential tracts refused.) Acquiescence i.e. P stands by where the complained act is still taking place or has not yet taken place and P knows the act is being done and it is aware of the legal rights involved: Armstrong v Sheppard & Short Ltd [1959] Laches i.e. Ps unreasonable inaction after the infringement of rights had already taken place and hence it would be wrong to D that an injunction be granted. Usually the length of delay is 7

the greatest factor to be considered, and it is a common defence to interlocutory injunctions: Legg v ILEA [1972]. 6. General principles for Grant of Interlocutory Injunctions American Cyanamid Company v. Ethicon Limited [1975] House of Lords Facts: P (15% market share) started an action against D (80% market share) for threatened patent infringement in a raw material used by D to make medical sutures. It sought an interlocutory injunction to restrain D from supplying those sutures pending trial. Held: the balance of convenience lies with the P and restored the injunction order granted by the trial judge. Principles: - P is not required to show a prima facie case of infringement i.e. he is more likely than not to obtain a permanent injunction at trial. It is not the duty of the court to resolve conflicts of evidence on affidavit as to facts alleged by each party; nor to resolve difficult questions of law. The court only needs to be satisfied that the claim is not frivolous or vexatious; and there is a serious issue to be tried, i.e. a real prospect of success. (not a high threshold, same as summary judgment) Once satisfied, the court will then consider whether the balance of convenience lies in favor of the plaintiff.

(1) Whether there is irreparable damage to P: if damages can adequately compensate P and D would be in a financial position to pay, NO interlocutory injunction should normally be granted despite strong merits of Ps case; the normal conditions (esp. real risk of disspation) for Mareva Injunction already satisfy irrepearable damage, so no need to discuss irreparable damage for MI! (2) If there is irreparable damage, whether D would be adequately compensated under Ps undertaking as to damages. If yes, interlocutory injunction will be granted provided that the undertaking is given by P. Where there is doubt as to the adequacy of the respective remedies in damages available to either party or both, the question of the balance of convenience arises. The court will look at other factors to decide where the balance lies.

Application: - Ds products were not yet on the market, so no perceivable damage (factories would not be closed, no workers would be laid off) and it maintained a dominant position in the market. P, on the other hand, was establishing a growing market share. If no injunction was granted pending trial, which could have been 2-3 years later, P would suffer from irreparable damage (lost its chance to increase its share as D would then have secured a monopoly). Also, it is commercially impracticable for P to seek a permanent injunction at trial, because to deprive public of this product after it has been put into use would be very damaging to Ps goodwill.

7. Where the interlocutory injunction has the effect of putting an end to the action, P would need to show that it is at least very likely to succeed at trial before it can trigger the exercise of the courts jurisdiction. The court should use its best endeavor to avoid injustice and to balance the risk of doing an injustice to either party. Fast-link Express Ltd v Falcon Express Ltd, HCA Facts: D was a new co (4 months) and the pronunciation of its name was same as P(a 13 year co), although the characters were different. P brought an action against D for passing off its name and applied for interlocutory injunction to prevent D from using its name. Practical effect of the injunction would mean that D would have to change its trading name and would unlikely to return to its old name even if it eventually succeeded, because it would have established business under its new name. The injunction would practically dispose of the whole action and there will not be a need for further trial.

Held: interlocutory injunction granted. On the evidence available, P has demonstrated a very high probability of success should the matter ultimately go to trial; the balance of convenience also lied in favor of P.

8. For mandatory injunctions, the plaintiff must show either a high degree of assurance; or alternatively, that there is a serious issue to be tried AND the balance of convenience tilts so much in favor that justice requires such an injunction to be granted. Music Advance Ltd & Another v. The Incorporated Owners of Argyle Center, HCA 2574/2002 Facts: Ps were tenants of the Argyle Center operating karaoke business. D, the IO, passed a resolution to stop passenger lifts from at night after a security guard was seriously assaulted by a drunken man at 6am. Ps sued D for breach of DMC and applied for an interlocutory injunction to order D to resume operation of the lifts pending trial. Held: injunction refused. On the evidence available, P could only establish a serious issue to be tried, but no more. The balance of convenience lied in favor of D (safety and security for D v. Loss of business for P). Principles: The basic approach to mandatory and prohibitory injunctions is the same i.e. they may be granted if it appears to be just and convenient to do so: s 21L HCO. The principal concern of the court at the interlocutory stage is the risk of injustice if its decision turns out to be wrong, so it will take whichever course appears to carry the lower risk of injustice. For mandatory injunction, the court will generally require a high degree of assurance, because they usually carry a higher risk of injustice: o They require a party to take positive step or to undo what has been done in the past (note: the court will also consider if the party had stolen a march by doing something that makes P need to satisfy a higher standard of proof in seeking a mandatory injunction);

o Positive steps usually causes more waste of time and money than an order that merely causes delay or restraining from doing a certain act; o Mandatory order usually gives the whole of the relief and makes it unlikely to have a trial;

o Mandatory injunctions are often difficult to formulate with sufficient precision to be enforceable; o A positive order is usually more intrusive because it involves the states coercion

However, where the withholding of the injunction would in fact carry a greater risk of injustice than granting it, it would be right for the court to grant the injunction even if it does not feel the high degree of assurance. A plaintiff who cannot show more than a serious issue to be tried will need to show the balance tilts so much in its favor that justice requires an injunction to be granted. But the court will never lose sight of the practical realities of the situation to which the injunction will apply.

9. Interlocutory injunctions restraining the breach of a clear and express negative covenant ought to be restrained irrespective of a balance of convenience, but the court may refuse an injunction where D can establish special circumstances that it is unjust to do so i.e. the hardship that would be caused to him far outweighs the inconvenience to P if such relief is refused. 10. Interlocutory injunctions in specific contexts An injunction may not be granted against the Government but the court may make an order declaratory of the rights of the parties instead. In employment context, where the mutual trust between the parties have broken down, the court will not readily grant an interlocutory injunction effectively compels the parties to work together: Warren v Mendy [1989].

11. Cross-undertaking as to damages The court will normally require P who is granted interlocutory injunction to give an undertaking to pay damages to D for any loss suffered by reason of the injunction if it then turns out an injunction should not have been granted. The cross-undertaking in damages is an important safeguard for D, as an interlocutory injunction is usually granted on an urgent basis without going deep into merits of the case. The cross undertaking will normally been enforced if the injunction turned out to be wrong, but the court retains the discretion not to do so.

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If it is doubtful whether P will be able to honor the undertaking, the court may require fortification of the undertaking by giving security, such as by a bond or by payment into court. Fortification may be provided by a third party Cf. FE6 Ex. 2: fortification may be provided by shareholders of the company plaintiff by bank guarantee Hence, for an ex parte injunction, if there is any doubt as to Ps ability to honor its undertaking, P is under a duty to provide relevant information on his financial ability. Failure of which may lead to discharge of the relief obtained. However, the impecuniosity of P should not by itself be a ground for refusing interlocutory injunction: American Cyanamide. Where P does not have sufficient financial means to make the undertaking, he may be permitted to apply for a permanent injunction without first applying for an interlocutory relief: Oxy-Electric Ltd v Zainuddin [1990]. P may also be required to pay reasonable costs and expenses of compliance with the order incurred by a third party on whom the notice is given Note: for legally aided P whose financial worth is in doubt, the cross undertaking as to damage are to be borne by P, but not covered by legal aid.

Wah Nam Holdings Co Lt & Others v Excel Noble Development & Ors [2000] Facts: Held: undertaking by D obtained in lieu of the injunction was discharged as there had not been full and frank disclosure. (note: sometimes P may be willing to accept undertaking in lieu of injunction as breach of undertaking may amount to contempt of court) Principles: - The evidence in support of ex parte application often contains reference to financial worth of the applicant, so as to demonstrate his ability to honor the undertaking. If there is no reference to such information, it is presumed that the applicant is capable financially. However, if Ps financial position is such that it fairly raises realistic doubts as to his ability to honor the cross-undertaking, P will be in breach of his duty of full and frank disclosure if there is no reference as to his financial worth(a factor that should be put upon the weighing scale). The judge may then refuse the injunction, grant the injunction conditional upon a fortification of the cross-undertaking, or grant the injunction despite the risk that the cross-undertaking may not be honored or fully honored. Where there are genuine doubts as to Ps ability to honor the cross-undertakings, it is not open to P to subsequently argue that he probably could meet any potential liability; or that he should be excused from non-disclosure because the ex parte order e.g. an Anton Piller order, has borne fruit, showing P in a bad light.

12. Procedures of making an interlocutory injunction 11

Any party to a cause or matter may apply to a judge in chambers: O 32 r11(1)(d). Registrar and masters have no power to grant interlocutory injunction unless consented by the parties: O32 r11(2). It may be made before or after the trial, whether or not the claim for injunction was included in the writ, originating summons, counterclaim or third party notice: O 29 r1(1). An interlocutory injunction is generally made by an inter partes summons i.e. with the other parties notified and given a right to contest the application at the hearing: O 29 r 1(2). In exceptional circumstances, it may be made ex parte on affidavit e.g. urgency: O29 r1(2), (3). o If urgency is the only ground, it has to be extreme, as the court can arrange inter partes hearing at short notice, or require that the application be made ex parte on notice so D may be present at the ex parte hearing and even provide information or evidence to the court. Secrecy is another ground for ex parte relief e.g. Mareva injunction, Anton Piller order, prohibition order. An application for an ex parte injunction may not be made before an action is begun by issue of writ or originating summons except in a case of real emergency. In that case, the injunction may be granted on terms providing for issue of writ or summons and such other terms as the court thinks it: O29 r1(3). Such an injunction will generally be granted only until a certain day. The court may on inter partes application discharge or vary an injunction granted ex parte. An applicant for ex parte injunction must make full and frank disclosure of all material matters within his knowledge, otherwise the court may set aside the order.

All summons (including inter partes and ex partes )are returnable on Friday i.e. the Summons Day; and they will only be heard on that day if 2 clear days notice has been given to the respondent: PD 5.3. Therefore, All papers in support of the application for interlocutory injunctions must be served and filed by Tuesday 10am of the same week, otherwise the application will be fixed for the next Friday. PD 11.1 further provides that: o The applicant should draft the order which the court is invited to make and deliver it to the court sufficiently long before the hearing to enable the judge to read and digest them all before the hearing.

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Usually the issue of a writ or originating summons and the swearing of an affidavit in support of an ex parte application for interim relief is required before the application is made. Papers required: affidavit stating the relevant facts(but no argument and submissions), skeleton arguments setting out how the requirements for the relief sought are met, draft minute of the Order sought (D may apply on notice to contest the Order, return date, and costs to be reserved.)

Mareva Injunctions The Court may grant an order to prohibit D from disposing of or otherwise dealing with the assets up to an amount stated pending action or trial (also called a freezing order; may also have post-judgment Mareva Injunction, but it cannot be final or permanent.) : s21L(3) DCO; S52B(3) HCO. otherwise dealing with should be given a wide meaning. It includes dissipation of Ds assets within the jurisdiction and removal of asset from the jurisdiction: Z Ltd v A-Z Ltd and AA-LL; dealing with is wide enough to include disposing of, selling, pledging or charging: CBS United Kingdom Ltd v Lambert Purpose is to ensure judgment obtained by P is enforceable against D by preventing D from dissipating assets, but it should not be used to prevent D from carrying on his business in the ordinary way, living his life normally, or to impede him from defending himself against the claim: Derby & Co. Ltd v. Weldon (Nos. 3&4) [1989] It binds not only D but all third parties (3P) served with the Order (Mareva Injunction should be served on D and on 3P that holds assets for D e.g. banks). When a Mareva Injunction takes effect i.e. pronounced on every asset of Ds covered by it, everyone who has notice or knowledge of it is obliged to do whatever he reasonably can do to preserve the assets covered by its terms. If he assists in disposing them he is in contempt of court: Z Ltd v A-Z. For example, a bank of notice of a Mareva Injunction may automatically revoke a customers instructions regarding his account and it is unlawful for the bank thereafter to honor the clients cheques The Court may grant Mareva Injunction in actions for debt, liquidated demand, commercial actions, damages for breach of contract or for tort, but it may be reluctant to do so when the claim is small. A Mareva injunction is a relief in personam against D, and should not be regarded as operating to attach goods, money or other assets, so it does not bind a prior mortgagee over the debtors property. Mareva injunction can be applied ex parte by affidavit in case of urgency: O 29 r1(2)

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A Mareva Injunction may be sought either in High Court or the District Court, whether before or after commencement of action, even post-judgment: O 32 r11(1)(d), (2); O 32 r16(1)(d), (2) RDC

General Principles: P must establish by affidavit evidence: (1) A good arguable case Rasu Maritima SA[1978]: Applicant not required to show that he could obtain summary judgment under RHC or RDC 014 but need to show good arguable case'; Hanjin Shipping [1998]: Good arguable case= more than barely capable of serious argument, but not necessarily one with a better than 50% chance of success (2) Assets within jurisdiction Ex. where D is a company operating in HK, likely to have (or insufficiency within but cash and bank accounts assets outside jurisdiction in worldwide Mareva Injunction) (3) Real Risk of Dissipation or i. Suspicion, fear or anxiety of dissipation are not enough, Removal of Assets must be a real risk ii. The court may consider all relevant circumstances to decide whether there was a real risk: (1) Ds past conduct relating to evasiveness or dishonesty; (2) Nature of assets e.g. cash high liquidity; (3) Standing and respectability of D in the jurisdiction w/ business e.g. a strong arguable case of fraud is sufficient for finding a real risk: CAC Brake Co Ltd Zhuhai v Bene Manufacturing; unacceptably low standard of commercial morality may lead the court to conclude there is a real risk: Honaisco Trading Ltd v Hong Yiah Seng Co Ltd (4) Balance of Convenience in i. Mareva Injunction is a draconian remedy and it should Favor of Grant not be misused. For example, it should not be applied when a corporate debtor is insolvent, because the judgment creditors proper remedy is to prevent the winding up petition, unless the company has assets and there is a real risk that the company will attempt to dispose of them to defeat the judgment. ii. Nor should it be granted to a non-secured creditor to obtain security or priority in respect of his debt where the debtor is suffering from liquidity problems or for the purpose of exerting an unfair pressure upon a debtor to settle.

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iii. Apply the American Cyanamide test here i.e. whether irreparable damage? If can be compensated by $, no injunction. If yes, whether D could be adequately compensated under Ps undertaking as to damages for any loss sustained by reason of injunction if D were to succeed at trial iv. Balance of convenience normally lies in favour of P (unless there are any special circumstances showing irreparable damages to D) if the normal conditions for Mareva are satisfied (5) Full and Frank Disclosure of all matters relevant (6) Particulars of his claim against D, including the grounds and amount, and must fairly state the points made against it.

The court will not grant a Mareva injunction for an unlimited amount. Ng Chun Fai, Stephen v Tamco [1994] * note there may be difficult to assess the amount in early stage of proceedings C.f. Sunchase International Group v Chik Wai Wan Stephen [1999]:CA granted the injunction despite applicant's failure to establish the precise amount of damage on the grounds that the applicant had established a very high probability of substantial loss or damage

(7) P must also make cross- a. but a mareva injunction will not be rejected on the undertaking as to damages, ground that the cross-undertaking is limited or of no with fortification e.g. by bank value, e.g. when the applicant is legally aided. guarantee or payment into b. The court may award aggravated damages for breach court) if considered necessary of the applicants cross-undertaking where the order by the court, has been obtained with intentional material nondisclosure c. P may also be required to give an undertaking to indemnify affected third parties: Practice Direction No. 11.1, para. 32.

(4) Factors that may prevent grant of mareva injunction(discretionary) Delay in application; Material non-disclosure; Insufficient risk of dissipation or assets Relatively small sums are involved (5) The Court should normally freeze Ds assets to the amount which Ps claim is prima facie justifiable: Z Ltd v A-Z and AA-LL. (6) Mareva Injunction may cover assets prima facie belong to a third party e.g. bank account in the name of third party based on the principles in S.C.S. Finance Co Ltd, v Masri

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a. When P requests a mareva injunction covering assets appear on their face belong to a third party, the court should only accede when there is good reason to suppose these assets belong to D. b. When D asserts the assets belong to a third party, or when a third party so asserts on an application to intervene, the court is not obliged to accept that assertion without inquiry, but it may do so depending on the circumstances. c. When the court decides whether to accept Ds or the third partys assertion without inquiry, it will be guided by what is just and convenience between P and D, and the third party. d. When the court decides to accept the assertion without further inquiry, it may order an issue to be tried between P and the third party before the main action, or it may order that the issue await outcome of the main action, depending in each case on what is just and convenient. (7) Ancillary Orders - The court may grant ancillary orders in support of a Mareva injunction e.g. disclosure of or protection of assets, discovery, cross-examination of deponents, tracing orders, delivery up order of assets (e.g. car, jewelry, choses in action): CBS United Kingdom Ltd v Lambert (8) The court may order discovery of documents or the answering of interrogatories to ascertain the whereabouts of assets. (9) Before inspection documents in possession of the debtors legal adviser will be ordered, the applicant must establish a real prospect that the information sought will lead to the location or preservation of assets to which a proprietary claim is made: Arab Monetary Fund v Hashim (No 5). (10) The court may also order a D be called for cross-examination upon his affidavit in exceptional circumstances, but D may refuse to answer on the grounds of privilege against selfincrimination, except for theft. a. If D fails to comply with an order of discovery, the defense may be struck out. (p. 522)but such failure does not bar a D from applying for discharge of the injunction. b. The court may order discovery against a third party if P can show that the order is necessary for enforcing the existing mareva injunction against an evasive D. e.g. a wife who got mixed up in Ds effort to evade judgment was ordered to disclose information necessary for tracing Ds assets. Here the Courts jurisdiction overlapped with the courts jurisdiction to order disclosure against third parties under Norwich Pharmacal Co v Customs and Excise Comrs (11) An Anton Piller Order may be granted in support of a Mareva Injunction to secure proper discovery of assets by the respondent, but it is exceptional: Refco Inc v Troika Investment Ltd

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(12) Norwich Parmacal discovery against Ds bank plus a gagging order may also be ordered by the court if it is necessary to make the Mareva Injuntion effective e.g. does not know whereabouts of money so cannot seek Mareva injunction to freeze the relevant amount A Co v B Co. Facts: - There is evidence that the president of the plaintiff company acted in breach of his fiduciary duties, which includes receiving secret commission and moving those monies in and out of bank account - Plaintiff sought Norwich Pharmacal discovery against the bank and gagging order so as to learn the whereabouts of the monies without alerting the wrongdoer Held: both reliefs should be granted. 1. Requirements of Norwich Pharmacal discovery: (1) There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place (2) It must also be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff (3) The discovery sought must not be unduly wide. only discovery of specific class of documents Note: cost of discovery to be borne by P on an indemnity basis. 2. Gagging order: An order restraining (a bank) from revealing or disclosing to any persons save for the purpose of ensuring compliance with the order or seeking legal advice, the proceedings which were about to be commenced by the plaintiff The court has a very wide inherent jurisdiction to grant injunctions where justice of the case so requires: s21L HCO Requirement: where there are grounds to believe that once a wrongdoer is aware he is being perused, steps may be taken by him to frustrate any claim that may be made against him or any investigations being carried out Gagging orders are exceptional remedies, and a strong case has to be made out Prima facie, the test is satisfied as the allegations here involve breach of duty and corruption, so the risk is real The court will also take into account the prejudice which would or might be caused to the the bank: Banks dilemma if gagging order in place: where instructions were received to operate the relevant accounts, should it follow the instructions (risk a claim of dishonest assistance), or should it decline to follow them (risk a claim of breach of mandate)? Due to gagging order, defendants ability to make enquiries is hampered Here, the particular prejudice to P is great while the prejudice to the bank is hypothetical. (no evidence that instructions have been given / likely to be forthcoming) Even if instructions, the court could make declarations to enable guidance to be given to the defendant Gagging order only of a limited duration e.g. 5-7 days after the bank has provided the requisite information with liberty for P to apply for further extension if necessary. This would allow P to seek NP discovery and gagging order against another bank to trace the money if it turns out that the bulk of monies had been transferred to that bank 17

(13) -

Release of assets from the jurisdiction

The court may order part of the assets frozen by a mareva injunction be released, but only for a proper purpose, such as payment of proper debts and legal expenses. In doing so, the court will balance the purpose of Mareva injunction to prevent dissipation of Ds assets and the Ds legitimate right to continue trading and to meet his proper liabilities. But such an order should not be granted if there are other assets which have not been discovered and which can be used to meet those expenditure: Assets Investments Pte Ltd v The United Islamic Investment Foundation (14) The Court may also require the plaintiff to undertake to pay any reasonable costs incurred by any person other than D to whom the notice of the injunction is given. (15) Service

A Mareva Injunction should be served immediately against not just the defendant but also third parties that are holders of an asset of the D such as banks. P must give TP notice of the Mareva Injunction, notify them of their right to vary the order and the details of the order with as much certainty as possible :Guinness Peat Aviation

Anton Piller Order 1. The Court has the inherent jurisdiction to make an order on ex parte application requiring D to permit P (subject to limitations) to enter its premises and remove and detain offending and or sought items pursuant to Court orders: Anton Piller KG v Manufacturing Process Ltd 2. O 29 r 2 allows for similar relief, with a caveat: (1)On the application of any party to a cause or matter the Court may make an order for the detention, custody or preservation of any property which is the subject-matter of the cause or matter, or as to which any question may arise therein, or for the inspection of any such property in the possession of a party to the cause or matter. (2)For the purpose of enabling any order under paragraph (1) to be carried out the Court may by the order authorize any person to enter upon any land or building in the possession of any party to the cause or matter (5)An application for an order under this rule must be made by summons or by notice under O 25 r 7. 3. The Anton Piller order has emerged because the relief under O 29 r 2: (a) Can only be applied inter partes, by summons or notice,

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(b) By giving notice, there would be the danger that an unscrupulous defendant would destroy evidence, papers will be lost, and in essence justice will not be done. - pirates of recorded music may get rid of all copies when one shopkeepers is sued: Ex p. Island Records Ltd. [1978] 1 Ch. 122 4. General Principles - 3 conditions (a) Extremely/very strong prima facie case that the damage, potential or actual, must be very serious for the applicant; (b) That the defendants have in their possession incriminating documents or things (which was the subject matter sought to be preserved) and that there is a real possibility that the defendants may destroy such material before any application inter parte can be made; and Cf. FE 6 Ex. 2: a company may not be able to run without certain documents, so no real possibility o destruction (c) That there is a balance in favour of the applicant in granting the order. A balance has to be struck between the plaintiffs need that the remedies allowed by law for the breach of his rights should be attainable and the requirement of justice that the defendant should not be deprived of his property without being heard Columbia Pictures Industries Inc. v Robinson [1987] Ch.38 - [The Order] was certainly not used as a daily and commonplace incident of ordinary commercial litigation Ng Chun Fai Stephen v Tamco Electrical and Electronics (Hong Kong) Ltd. [1994] Even in cases in which the plaintiff has strong evidence that an employee has taken what is undoubtedly specific confidential information, such as a list of customers, a Court must employ a graduated response The fact that there is overwhelming evidence that the defendant has behaved wrongfully in his commercial relationship does not necessarily justify an Anton Piller order In many cases it will therefore be sufficient to make an order for delivery up of the plaintiff's documents to his solicitor or, in cases in which the documents belong to the defendant but may provide evidence against him, an order that he preserve the documents pending further order, or allow the plaintiff's solicitor to make copies. Lock Plc v Beswick [1989]

5. Duty of full and frank disclosure and a need to give cross-undertaking as to damages, to be forfeited if necessary. 6. The Court will not make such an order unless it is necessary in the interests of justice or in terms wider than necessary to achieve the legitimate object of the order: Ng Chun Fai Stephen v Tamco Electric and Electronics (Hong Kong) Ltd Order for Security for Costs 1. O 23 r1(1): grounds for order for security for costs (see below), exception in r1(2) O 23 r1 (3) also applicable to counterclaim 19

2. S. 357 CO: if it appears by credible testimony that there is reason to believe that a limited company plaintiff incorporated in Hong Kong will be unable to pay Ds costs, the Court may require sufficient security for those costs, and may stay proceedings until the security is given. Does not apply to companies incorporated overseas with central management in HK, Court recommended to fill the lacuna: Akai Holdings Ltd (CFA) Burden on D to show the company will be, not merely maybe unable to pay Ds costs and must be supported by credible evidence: Success Wise Ltd v Dynamic (BVI) Ltd 3. The Court only has jurisdiction where the statutory grounds exist and no inherent jurisdiction: Condliffe v Hislop. When such grounds exist, the court will exercise its discretion to decide whether to order security for costs under O23 r1(1) or S357 CO. 4. O2 r3: the Court may order any party (including D) to pay a sum into court if that party has without good reason failed to comply with a rule or court order. 5. Who is allowed to make the application? a. Order 23 rule 1(1): the defendant b. Order 23 rule 1(3): the person in the position of the defendant 6. Grounds Where D proves either one ground P ordinary resident out of jurisdiction: O 23 r1(a) Reason: prima facie unjust as foreign P more or less immune against costs if unsuccessful: Walt Disney Co v Disney Property Agency Test Burden on D to prove on a balance between permanent and ordinary residence, a matter of fact and degree where the central management and control lies: Charter View Holdings (BVI) Ltd v Corona Investments Ltd v Another 1.The mere assertion of where the company's central management and control is unsatisfactory, primary facts substantiating the assertion is required 2.All the circumstances in which the company carries on its business should be taken into account, though the weight to be applied to each factor will obviously differ from case to case. Those factors include the provisions of the company's objects clause, the place of incorporation, the place where the company's real trade and business is carried on, the place where the company's books are kept, the place where the company's administration is carried out, the place where the directors with power to disapprove of local steps or to require different 20

ones to be taken themselves meet or are resident, the place where its chief office is or where the company secretary is to be found, and the place where its most significant assets are. 3. In applying the test to a non-trading company, it may be more important than would otherwise be the case to have regard to the nature of the company's corporate activities. P may resist by showing fixed assets in HK: Tsang Yee Lui v Personal Representatives of Mak Chik Wing Nominal Plaintiff: O 23 r1(b) A P who has assigned the benefit of the action: Semler v Murphy Ps Address not stated or incorrectly stated in Not when P was innocent and without intention writ or other originating process: O23 r1(c) to deceive: O 23 r2, Raj Kumar Mahajan v HCL Technologies (HK) Ltd And Anothers

P changed address with a view to evade consequences of the litigation: O23 r1(d) 7. Relevant considerations for court to exercise discretion: (Book p. 500-501) - whether Ps claims is in good faith and not a sham; - whether P has a reasonably good prospect of success; (but cf. point 2 in Giuseppina Tagliani) - whether there is an admission by D on the pleadings or otherwise that money is due; - whether the application for security is being used oppressively e.g. so as to stifle a genuine claim; - whether Ps want of means, esp in case of limited company, has been brought about by any conduct of D, such as delay in payment, or in doing his part of the work - whether D is counterclaiming for a substantial sum in respect of the same subject matter as Ps claim; - whether application made at a late stage of proceedings - degree of ease by which a judgment may be enforced against a foreign plaintiff e.g. reciprocal enforcement agreement - financial position of P, if P is impecunious and an order may stifle Ps claim, the court may decide not to make an order a very strong factor against making an order - the fact that any costs awarded against P would be paid out of Legal Aid Fund

Giuseppina Tagliani v Lee Wai Yin, Elvis Facts: (16) P sued D (a surgeon) for $7.6m for medical negligence (17) P moved to Singapore after action On exercise of discretion: 21

1. The court must carry out a balancing exercise weighing the injustice to the P if prevented from pursuing a proper claim by an order for security against the injustice to the D if unable to recover costs from the P in due course. 2. Court may have regards to Ps prospect of success, but should not go into merits in detail unless it can clearly be demonstrated that there is a high degree of probability of success or failure. 3. The court should consider not only whether the plaintiff can provide security out of its own resources, but also whether it can raise the amount needed from its directors, shareholders or other backers or interested parties. 4. It is for the plaintiff to satisfy the court that it would be prevented by an order for security from continuing the litigation. Held: on the facts, Ds likely costs could be up to around $2m, but P not able to afford it and unable to raise any money from friends and relations apart from up to $300,000 => security for costs of $300,000 ordered.

8. In exercising its discretion under O 23 r 1(a), if other matters are equal, it is normally just to exercise that discretion by ordering security against a non-resident plaintiff. However, the Court will usually not order security for costs (1) if there is a co-plaintiff resident within the jurisdiction: DHormusgee v. Gray, or (2) where the plaintiff has substantial property of a fixed or permanent nature within the jurisdiction: Re Apollinaris Co.s Trade Marks and A-G v. Vianini Lavori SpA

9. Amount for security for costs: (18) Per discretion of court having regard to all circumstances (19) Usually extend to costs already incurred and future costs: Henrik Anderson & another v Huang Kuang Yuan & Others [1997] (20) Costs are usually assessed on a party and party basis, not on an indemnity basis: CalTrade Pte Ltd. V Mindo Community Trading Co. Ltd [1982] 10. Application for security for costs a. May be made at any stage of the proceedings (21) Delay may be relevant where the court exercises it discretion to refuse security; Henrik Anderson & another v Huang Kuang Yuan & Others [1997] 11. Manner of giving security: as directed by the court O23 r 2 (22) Ex. by payment into court, solicitors undertaking, by bank guarantee 12. Procedure (23) (first by demand letter) Application by summons supported by affidavit. (24) With a skeleton bill of costs stating the estimated costs already incurred and estimated future costs 22

(25) master will fix the amount, and give directions on the mode and time where the security is to be given, usual order a specific sum by a certain date be paid into Court, also usual to stay proceedings until security is give; Lam Fei Hong v Wong Kam Fong 13. Default in giving security (26) If the plaintiff defaults in giving security, an unless order may be granted to require him to give security before a specified time, and in default the action will be dismissed. (27) The power to dismiss an action for default of payment for security for costs derives from the inherent jurisdiction of the Court and applies to orders made under section 357 of the Companies Ordinance and Order 23 rule 1. The Court has power to dismiss the action where it is satisfied that: a. the action is not being pursued with diligence; b. there is no reasonable prospect that the security will be paid; or c. the time limit prescribed by the Court for giving the security has been disregarded.

Prohibition Order 1. O44A r2: A Plaintiff or judgment creditor may apply ex parte to the Court for an order prohibiting a debtor from leaving Hong Kong. 2. Prohibition Order can be obtained at any time: Pre-action: O 44 r1 Pre-judgment Post-judgment: s. 21B(1), (2) Cf. enforcement 3. Section 21B(1)(c), High Court Ordinance: (1) The Court shall have jurisdiction to make an order prohibiting a person from leaving Hong Kong (a prohibition order) to facilitate the enforcement, securing or pursuance of(c) a civil claim (other than a judgment)(i) for the payment of money or damages; or (ii) for the delivery of any property or the performance of any other act. 4. A civil claim should be given the widest possible meaning (see Bunker Holdings Ltd. v. Asia Pacific Seafood Management Ltd 5. S 21B(3) Conditions for PO to be granted under S21B(1)(c): (a) Good cause of action Usually demonstrated by reference to writ and supported by affidavit If later Graham can satisfy the Court that he has "a substantial defence" to E's claim, the Court shall discharge the PO (if granted) under O.44A, r.4 23

(b) The person against whom PO is sought: (i) incurred liability in HK while he was Crystallization of liability in HK: Bank of present in HK; or India v Murjani Industries (HK) Ltd & Anor. CA held that the defendants liability on the guarantee was crystallised when he was served with a demand for payment in Hong Kong). (ii) Carries on business in HK; or personal business of the debtor (and not the business of the debtor companys director): Chase Bank Intl v Carlos Shalon Sultan Abadi ; not even sole beneficial shareholder with complete control: Re Brauch a matter of fact supported by evidence of residence: Chase Bank Intl v Carlos Shalon Sultan Abadi

(iii) Is ordinary resident in HK.

(c) That person is about to leave HK (d) By reason of (c), judgment against that a matter of fact and can be in relation to the person is likely to be obstructed or obstruction of matters in relation to obtaining delayed and enforcement of judgment: Bank of India.

6. Procedure Application is made ex parte, by affidavit: O 44A r 2. As with all ex parte applications, the applicant is under a strict duty to make full and frank disclosure. Note that this duty is continuous and it extends to relevant information that comes to the notice of the applicant after the order has been granted but before it has been served. Where this happens, the applicant must seek a further appointment before the judge who granted the order and inform him of the fresh information: Auto Treasure Ltd v Pyramid International (a firm) (CACV 24/1992, 22 May 1992) Upon the hearing of the matter, the court may make an order subject to such conditions as it thinks fit, including a condition that the order shall have no effect if the judgment debtor satisfies the judgment or provides such security as the court orders : s 21B(4) (b) HCO. The order must be in the prescribed form: see App A, Form 106. 7. Service and duration of the order

Under s 21B(6), a sealed copy of the order must be served on: d. The Director of Immigration e. The Commissioner of Police f. The judgment debtor, if he can be found 24

Additionally, the Chief Bailiff must be served with four sealed copies of the order. See Law Society Circular 98-185(PA). Once the Director of Immigration has been served, he will place the name of the debtor on the stop list. A prohibition order lapses on the expiry of one month, but the court may extend the order so that it operates for a maximum period of three months: s 21B(5) HCO, s 52B(5) DCO. After the expiry of the three-month period, the court may issue a fresh prohibition order if satisfied by evidence that the order should be continued: Hong Kong Industrial and Commercial Bank Ltd v Wong Siu Leung Tammy & Ors 8. Effect of the order If the judgment debtor (after having been served with the order or otherwise informed of its effect) attempts to leave Hong Kong, he may be arrested by any immigration officer, police officer or bailiff: s 21B(7) HCO; s 52E(7) DCO. An attempt to leave Hong Kong is a breach of a prohibition order and constitutes a contempt of court: Sino Wood Investment Ltd v Wong Kam Yin [2006] 1 HKLRD 176; [2006] 1 HKC 1, CFA, overruling the Court of Appeal at [2004] 2 HKLRD 1053, CA.

9. Discharge of order Once the judgment debtor has made payment of the monies due, the usual practice is for the prohibition order to be discharged by consent. Provision is also made in O 44A r 4 for the application by the debtor to discharge the order.

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